Navigating Air Travel's New Reality

Following up on yesterday's post, I came across this interesting article. The author went through the same sort of experience I went through but was more patient and giving to the airline industry...or atleast, she tried to explain the problems more gently and made a different point.

I am sitting in seat 10B on flight 744 from Dallas to New York, getting a front-row view of where air travel is headed in this country. Booked two weeks in advance, my coach-class ticket cost $1,258 round-trip—and that was without checking a bag, changing my ticket, or any other innocuous act that could have upped my tab by hundreds of dollars... [My] only gustatory options on this three-hour dinnertime flight are a standard-issue flagon of plonk and an unwholesome assortment of snack foods. Together, they set me back more than $10.

....

Raising prices for diminished service isn't a winning strategy for keeping customers. Indeed, in a recent Condé Nast Traveler survey, fully 82 percent of readers said they'd travel less if prices rose by 20 percent or more. And while 47 percent said they would be willing to pay extra for an in-flight meal, most balked at the other fees, with only 20 percent saying they would shell out to check a bag. Most agreed the air travel experience has headed south: 70 percent of those surveyed said they had experienced a flight delay of more than an hour in the past year, and nearly 30 percent said a carrier had lost their bag or canceled their flight.

How bad will it get? Here, we look at the many ways in which you will feel the airlines' changes—and what you can do to minimize the pain.

[READ MORE]

The stupidity of short-term thinking

photo courtesy: Innaminnafly

I'm flying to Europe for six weeks in August (and I won't be blogging much during that time as I know you are all dying for a break! :-) ). And, I'm VERY VERY annoyed at the airline industry right now.

Travel is a luxury item, and with the economy struggling as it is, only crazy people (like me) who are footing their own bills or business people who have someone else footing their bills are doing the traveling. The once high-flying (pun-intended) airline industry is struggling to pay their own bills, and is consequently trying to punish anyone who is trying to help them out.

Normally, with packed flights through most days of the year, airlines keep peak season rates relatively low. But with such low demand, airlines are trying to make their profits entirely in the peak season...so poor, unfortunate idiots like myself are stuck with abnormally high rates. (I try my best to avoid peak traveling seasons in general, because I dislike crowds intensely. But this time, I had no choice.)

This is what I call stupid short-term thinking. While they make money in the short-term (really??), in the long-run, they are "shooting themselves in the foot." And here's why:

• They are losing on the majority of people sitting on the fence about traveling. I know plenty of people who suddenly have a lot of time on their hands and have been contemplating traveling, but have given it up because of the exhorbitant rates. Airlines are betting on the few who HAVE to fly, not on the potential of people who might fly if their deals were better.

• They are losing out on customer loyalty. What few airlines realize is that a lot of frequent travelers are loyal, and are powerful word-of-mouth marketers. I am loyal to Virgin Airlines for example (amazing customer service and in-flight service!!), and Southwest Airlines, and I used to be to JetBlue before their customer service started sucking. When you bully people into doing things they don't want to do or don't think is fair, they will hold it against you. In this case forcing us to pay unfair fees and putting up with awful customer service while it will get us this time, will lose us in the long run (this is why I will NEVER fly Northwest/KLM again!)
  

• Allowing poor business practices to continue, even flourish: The larger US Airlines have the absolute worst service in the world, and they have no excuse. For years, the US government notoriously protected their airline industry, allowing awful business practices to endure. When the markets finally opened and protectionism was terminated, these "institutional airlines" (US Airways, Delta, American Airlines, United, etc) struggled. Their burgeoning bureaucracy made them inefficient against innovative, nimble, emerging airlines like Southwest Airlines, JetBlue, Frontier, and others. The older airlines have only survived by capitalizing on their monopoly routes, their loyal customers, and building alliances with better airlines around the world.

Still struggling, the institutional airlines turned to stupid short-term thinking, taking their ire out on the customers. Fly one of them and you'll find yourself paying for everything. None of the institutional airlines have on-demand entertainment, a common availability amongst every first-world airline. If you want it, you pay for it. Many of these airlines are locked into lengthy and heavy contracts with labor unions; so their staff are often old, cranky, angry people who have seen a once glorious job go sour. Naturally their customer service is terrible. Further, they've cut down on seat spacing, have aging fleets, ancient in-flight entertainment, and make you pay for everything, including your water and your luggage (in addition to your already sizable airline ticket).

Its ridiculous to me that these airlines are thriving in this economy. And why?? Because the now cost-conscious consumer is forced to go with the cheapest deal, not the best airline. While hunting around today, for example, Delta Airlines was charging $1121 for a round-trip ticket to Paris; Lufthansa, a relatively superior airline, was charging $1600 (which is currently average for all non-American carriers). Normally, I would pay the extra $100 or $15o over Delta just to get better service. But this time, I can't even afford the $1121. But its my only choice, so I take it. So here we have it...the market is working against us and them.

Yes, airlines have investors and shareholders. But shareholders are reasonable people. Everyone knows that the economy is doing terribly. It would be ridiculous to expect that Delta would churn out record profits at this time...

My point is this...short-term thinking, without considering the bigger picture is very stupid and dangerous. While the ailing US institutional airlines continue to get through another year, its only a matter of time before they will have to bow out. After all, GM just did...only a matter of time with the rest...

Zappos map to success

You will rarely hear Tony Hsieh speak, because he's apparently very shy. His company Zappos, an online shoe retailer that is as famous for its amazing shoe lineup as it is for its outstanding customer service, has been getting increasing attention for its incredible growth over the past couple of years. Their customer service has been largely credited for its sales growth and strong customer loyalty (I have friends who will buy ONLY from zappos, even if it is more expensive!).

In his recent SXSW speech, Hsieh revealed the cornerstones of his company's model for marketing (I have previously blogged about Zappos and their amazing model here):

1. Market through your customers; harness the power of word-of-mouth: Zappos takes most of their marketing budget and puts it into enhancing their customer service. This creates happy customers who spread the Zappos gospel through word-of-mouth. Not only that, but 75% of their customers are repeat customers; essentially they have STRONG customer loyalty.
2. Make your contact information obviously and easily available: The first thing you notice about Zappos (other than the shoes) is their toll-free customer hotline. There is no need to dig. Its just right there to use, and boy do customers use it!

3. Use the telephone: It is still the most universally accessible technology. It also requires one-on-one communication, thereby enhancing the customer's experience.

4. Focus on building relationships. Give good customer service at all costs. For eg. if zappos is out of a certain shoe or shoe size, customer reps are trained to find a competitor who might have it and direct the customer there. While they lose business in the short term, they have gained the trust and loyalty of the customer in the longterm.

5. Train your service team to imbibe and imbue the core philosophy: Everyone who works at Zappos is aware that the bottom line is building relationships with the customer.
6. Reward loyalty: Loyal customers are often suddenly surprised with upgrades. Customers are rewarded in their shipping cycles.

7. Realtime Tracking: Zappos shows only the items that are stocked. This shows a level of respect and honesty that customers greatly appreciate. This also enhances loyalty.
8. Make maintaining your company culture the absolute bottom line: Zappos has a hard rule about barring anyone who doesn't pass their culture-fit interviews from working at the organization. Further, they offer financial incentives to employees to leave if they don't feel a fit. This decision is left to the employees to take at any point.

9. Give your employees an outlet to express their individuality and opinions: Zappos puts out a company culture magazine every year. It contains unedited pieces of work submitted by every employee, largely focusing on their thoughts about working at Zappos. Employees are also encouraged to communicate amongst each other frequently on mediums such as twitter.

10. Chase the Vision, not the money. As they are walking examples, Zappos believes in following the vision. The money and the business will follow automatically.